Sally-Ann Hart: I would like to focus my remarks on our retail sector. The last few years have seen an acceleration in shop closures and job losses. The Centre for Retail Research found that more than 17,000 shops closed in 2022, equivalent to 47 a day and the highest total in five years. More than 5% of retail staff lost their jobs last year through insolvencies and store closures arising from rationalisation.
Retail, especially independent shops, is hugely important in beautiful Hastings and Rye, where over 30% of the local economy depends on the hospitality and tourism sectors. I know many local outlets have ceased to trade, and the town centre in Hastings is punctuated with empty or shuttered shop windows. Even key areas such as Robertson Street, which has seen something of a revival since the pandemic, now has prominent outlets closed and empty. Sadly, some businesses we lost were Hastings institutions, such as the fishmongers in Queens Arcade, which had been there for more than half a century. Others include the large Argos near Breeds Place, which remained empty for several years prior to the pandemic, and big names such as Game, in Priory Meadow. Several cafés across the town have also closed.
It would be unfair to say that all those business closures relate to the business rates system. Some are due to an increase in rent, on top of the increase in supply chain and energy costs caused by the pandemic and Russia’s invasion of Ukraine, but I have no doubt that business rates is a significant contributory factor to many business closures across the country. The business rates system has become disconnected from the realities of modern retail and retail real estate, which is why I am pleased the Government have decided to modernise it.
There are several positive measures in the Bill which will help our retail sector. A more frequent cycle of three years for revaluations will allow changes in economic conditions to feed through more rapidly into businesses’ liabilities. As long-term changes in the economy continue to manifest, accelerated by the aftermath of the pandemic, that will ensure the business rates system is more agile and responsive to change, while also improving fairness for ratepayers. However, it has been argued that annual revaluations would be most ideal, ensuring a highly responsive and up-to-date system. Perhaps the Minister can explain a bit more about that in her response.
The digitalising business rates project will, I hope, modernise the business rates system, improve the targeting of rates relief, generate better data for central Government and local government and help to improve business rates compliance. Measures to support de-carbonisation and investment, including a relief for low-carbon heat networks and a new improvement relief, will ensure that, from April 2024, ratepayers will not see an increase in their rates bill for 12 months from qualifying  improvements made to their property. That is important because businesses that improve their properties should not be penalised for it.
However, I have some concerns that the Bill does not go far enough to help small businesses. The move to the three-yearly valuations has a cost to the ratepayer. The Valuation Office Agency has imposed a corresponding duty to notify, which requires ratepayers to inform it of any changes made to a property within 60 days of the change. This new duty represents a significant administrative burden for businesses, particularly the small ones. Whenever a change is made to the property, the occupier must inform the VOA within 60 days, or be met, it seems, with punitive fines.
The VOA’s job is to determine a property’s rateable value. It appears that the imposition of the new duty is simply the VOA asking the ratepayer to do its job for it. Many small businesses will struggle with that additional burden. Perhaps most concerning is the lack of a corresponding duty for the VOA to respond to ratepayers’ requests. Although the ratepayer must notify the VOA within 60 days—with the threat of financial sanctions—the VOA may respond to the ratepayer at its leisure. That hardly seems fair.
I am concerned that the uniform business rate multiplier has risen to 51p, which is a significant increase from the 43p that it stood at on its introduction in 1990—admittedly, that is quite a long time ago. Although freezing the UBR is welcome, it is temporary and contrary to our promise in the 2019 Conservative manifesto to cut the burden of tax on businesses by reducing business rates. The Bill means there may be annual increases in the UBR by linking it to the consumer prices index. I would be grateful if the Minister could explain a bit more about that. We need to keep in mind that in 2019 voters were promised reduced business rates bills on SMEs. Can the Minister outline what has been done to lower the UBR? Can she explain how linking the UBR to inflation through the consumer prices index will help to reduce the tax burden on businesses?
Overall, the Bill is welcome as a positive step in the right direction. We must do all we can to protect our retail sector. The Conservative party is always the party for small businesses. I would like a business rates system that flexes with profit rather than one based on the value of a property—that would be fairer.